By DAN REYNOLDS, senior editor of Risk & Insurance®
When it comes to offshore energy risks, the world is a different place since the explosion of the Deepwater Horizon rig in the Gulf of Mexico in April. Insurance brokerages are sharpening their games accordingly to better compete in that world.
Last week, Chicago-based Aon Risk Solutions, the risk management business of Aon Corp., announced that it was forming a Global Energy Risk Unit that will consolidate two existing units, Risk Reliability and Systems Engineering and Hydrocarbon Risk Consultants.
Neil Harrison, the group managing director of Aon Global Risk Consulting, said that the 49-person unit will be comprised of 80 percent engineers and operate primarily out of four offices in London, Houston, Singapore and Dubai.
"Some of this work can be done on a desk-based consulting basis, particularly around evaluations, but much of it obviously requires on-site activity and that is really another facet behind the move we are making here,' Harrison said.
The group will be hiring to increase its numbers, Harrison said, and will focus primarily on onshore oil and gas, offshore exploration and production, pipeline and utility firms, refining and petrochemicals.
"The BP event raised the level of discussion around these issues and the need for energy risk engineering, but actually our plans were in place prior to that happening," Harrison said.
Resources are being piled into oil and gas energy brokering, but still so much remains uncertain, according to Tony Pickering, the London-based executive chairman of Cooper Gay & Co.'s dedicated energy unit, which does a lot of work with nationalized oil producers in Venezuela and Mexico.
Pickering said that the insurance industry is on edge, for example, to see what legislators in the United States are going to demand in insurance cover for offshore drilling operations.
The rumored federal government mandate for something like $20 billion in cover to pay for the damages of another Deepwater is something that is beyond realistic, according to Pickering, considering that the global all-in premium for offshore is around $3 billion.
Pickering added that the energy brokering world has changed since Deepwater, with competitors being far more open with one another as they try as a group to sort out the implications of more government regulation.
Pickering said that his energy team would like to take advantage of Cooper Gay's presence in Brazil to get more business there and would also like to get a taste of business in North America, while maintaining its relationship with European oil and gas risk managers. He said his unit of 15 could grow by 50 percent in the next five months.
In terms of where he wants his unit to go, Pickering believes it is in the first mile of a marathon. Aon's Harrison looks at things the same way.
"We don't have a specific goal in terms of expanding headcount or anything else," Harrison said.
"Our intention is to grow with client need clearly. We do, however, expect to be investing in teams and talent in this unit through 2011 and beyond, so this is step one if you will of a longer-term growth strategy."
November 22, 2010
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